These mortgages are backed by pension funds and life insurance companies and the like. They're the ones that will have to take a hit on the return on their investments.
And we're not necessarily speaking about the resetting of the interest rate here.
If a 720 FICA score mortgagee has to sell his $750K executive home with a 748K balance of mortgages...that can only sell for $675K...before paying real estate fees and seller subsidies for the buyer...that's a problem.
And it can all be traced down to the lower end of the market if Pedro OR Peter can't afford to buy their 1st home.
It's really a deadly perfect storm scenario working here. A lot of factors.
Not enough qualified 1st-time buyers create gridlock on the move-up market.
A volatile interest rate market which historically overreacts...as Wells Fargo did on the fixed rate jumbo product earlier this week.
Supply and demand...glut-filled inventory in the majority of neighborhoods.
Oh...it's going to get REAL ugly this time....and I was around for the last two...in 1981 and 1990.
I wasa around for it and more. I went throught he oil bust of the late 1980’s. But is am still not in favor of a bailout.